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Can low efficiency solar modules really survive the ongoing solar revolution? Companies are constantly trying to improve efficiency to get more power out of each panel and right now it looks like First Solar (NAS: FSLR) is falling behind.

Despite slow and steady improvements, First Solar's cadmium-telluride (CdTe) panels convert just 11.7% of the sunlight that hits them into electricity. That falls far behind the 20.1% efficient panels SunPower (NAS: SPWRA) (NAS: SPWRB) is making and the 16.4% efficiency Trina Solar (NYS: TSL) has reached.

As panel costs fall the balance of system costs becomes more important, highlighting First Solar's current conundrum. A less efficient panel requires more land, more labor to install, and more auxiliary components than higher efficiency panels. And with feed-in tariffs now leaning on rooftop installations in Europe, First Solar is now behind the curve.

The good news is that First Solar's engineers have recently created a record 17.3% efficiency CdTe cell, which apparently makes for a 13.4% efficient module. That beats General Electric's (NYS: GE) recent 12.8% efficiency, but both need to improve dramatically.

The big technology question is whether First Solar's CdTe modules will eventually be replaced by something else. First Solar is researching copper-indium-gallium-selenide (CIGS) solar cells, but no one has been able to mass-produce the technology profitably (see Solyndra).

Cost lead won't last foreverBarring a major change in technology, First Solar expects efficiency to reach 13.5%-14.5% in 2014, but that will still be well behind competitors' levels. And with costs falling fast for manufacturers like ReneSola (NYS: SOL) and Yingli Green Energy (NYS: YGE) , First Solar's cost advantage will soon be eaten away by its competitors' lower balances of system costs. That's why I've made SunPower my top pick in solar, and a reason to avoid First Solar.

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Gumby

Aluminium is over 90% efficient.... How? Solar concentration... Photovoltaics is just for converting sunlight into electricity... Aluminium is for concentrating sunlight into home heating, cooking, industrial applicatons, etc.. Why we still havent begun using aluminium.. I will never understand !! to be really frank with you.. I am so appalled!